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Vertical Industry Relations, Spillovers and Productivity: Evidence from Chilean Plants

Author

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  • López, Ricardo A.

    (Indiana University)

  • Suedekum, Jens

    (Heinrich Heine University Düsseldorf)

Abstract

We use disaggregated data on Chilean plants, and the Chilean input-output table to examine the impact of agglomeration spillovers on total factor productivity (TFP). In common with previous studies, we find evidence of intra-industry spillovers, but no evidence of cross-industry spillovers in general. This picture changes, however, when we take vertical industry relations into account. We find important productivity spillover effects from plants in upstream industries. Interestingly, a similar effect cannot be found from plants in downstream industries. The number of plants in these sectors has no effect on firm level TFP, just as the number of plants in other industries that are neither important upstream suppliers nor downstream customers also has no effect. Agglomeration effects are stronger for small than for large plants.

Suggested Citation

  • López, Ricardo A. & Suedekum, Jens, 2007. "Vertical Industry Relations, Spillovers and Productivity: Evidence from Chilean Plants," IZA Discussion Papers 3047, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp3047
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    2. Combes, Pierre-Philippe & Gobillon, Laurent, 2015. "The Empirics of Agglomeration Economies," Handbook of Regional and Urban Economics, in: Gilles Duranton & J. V. Henderson & William C. Strange (ed.), Handbook of Regional and Urban Economics, edition 1, volume 5, chapter 0, pages 247-348, Elsevier.
    3. repec:spo:wpecon:info:hdl:2441/1dn2prktaq9p3949il1h9ds86b is not listed on IDEAS
    4. Hanlon, W. Walker & Miscio, Antonio, 2017. "Agglomeration: A long-run panel data approach," Journal of Urban Economics, Elsevier, vol. 99(C), pages 1-14.
    5. Carlos Carreira & Luís Lopes, 2016. "Collecting new pieces to the regional knowledge spillovers puzzle: high-tech versus low-tech industries," GEMF Working Papers 2016-06, GEMF, Faculty of Economics, University of Coimbra.
    6. Johannes Boehm & Swati Dhingra & John Morrow, 2022. "The Comparative Advantage of Firms," Journal of Political Economy, University of Chicago Press, vol. 130(12), pages 3025-3100.
    7. Goya, Daniel, 2021. "The network effect of Chinese competition on what domestic suppliers produce," Economic Modelling, Elsevier, vol. 102(C).
    8. Boehm, Johannes & Dhingra, Swati & Morrow, John, 2016. "Swimming upstream: input-output linkages and thedirection of product adoption," LSE Research Online Documents on Economics 66418, London School of Economics and Political Science, LSE Library.
    9. Swati Dhingra & John Morrow & Johannes Boehm, 2015. "Input Capabilities and Product Adoption," 2015 Meeting Papers 963, Society for Economic Dynamics.
    10. Steven Brakman & Charles Van Marrewijk, 2009. "Introduction: Heterogeneity At Different Spatial Scales," Journal of Regional Science, Wiley Blackwell, vol. 49(4), pages 607-615, October.
    11. Daniel Goya, 2019. "Chinese competition and network effects on the extensive margin," Working Papers 2019-01, Escuela de Negocios y Economía, Pontificia Universidad Católica de Valparaíso.
    12. Jorge Balat & Camila Casas, 2018. "Firm Productivity and Cities: The Case of Colombia," Borradores de Economia 1032, Banco de la Republica de Colombia.
    13. Jean Dubé & Cédric Brunelle, 2014. "Dots to dots: a general methodology to build local indicators using spatial micro-data," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 53(1), pages 245-272, August.
    14. Walker Hanlon & Antonio Miscio, 2014. "Agglomeration: A Dynamic Approach," NBER Working Papers 20728, National Bureau of Economic Research, Inc.
    15. Bairy, Gaurav Gopal & Raj, Prateek & Yayavaram, Sai, 2025. "Asymmetry and heterogeneity in inter-industry productivity spillovers," Working Papers 360, The University of Chicago Booth School of Business, George J. Stigler Center for the Study of the Economy and the State.
    16. Gómez-Lobo, Andrés & Sánchez González, Santiago & González Mejia, Vileydy & Calatayud, Agustina, 2022. "Agglomeration and Congestion in Latin America," IDB Publications (Working Papers) 11952, Inter-American Development Bank.
    17. Marijke J. D. Bos & Gonzague Vannoorenberghe, 2018. "Total factor productivity spillovers from trade reforms in India," Canadian Journal of Economics, Canadian Economics Association, vol. 51(2), pages 549-606, May.
    18. Louren�o S. Paz, 2014. "Inter-industry Productivity Spillovers: An Analysis Using the 1989-1998 Brazilian Trade Liberalisation," Journal of Development Studies, Taylor & Francis Journals, vol. 50(9), pages 1261-1274, September.

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    JEL classification:

    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes
    • R15 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Econometric and Input-Output Models; Other Methods
    • O18 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Urban, Rural, Regional, and Transportation Analysis; Housing; Infrastructure
    • O54 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Latin America; Caribbean

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